The Report stage amendments relating to EIS and VCT have now been published and can be found here. Explanatory notes have been published alongside the amendments which provide further information and can be found here. Thank you to everyone who responded to the draft legislation with comments, especially to the legislative working group for their input. The amendments correct technical flaws, provide clarification and ensure alignment with State aid approval, and cover:
- older companies receiving their first risk finance investment under the 50% turnover test;
- the provision of information and share exchanges;
- funding limits in relation to subsidiaries;
- powers to amend the EIS and VCT rules;
- liquidity management for VCTs; and,
- other minor technical changes.
In addition, in response to a significant increase in the use of the schemes to fund energy generation, the government has decided to introduce an amendment to exclude activities that involve the provision of reserve power capacity and generation, for example under a Capacity Market agreement or Short Term Operating Reserve contract. As these activities are asset-backed and benefit from a guaranteed income stream, mainstream financing is typically already available which removes the need for tax-advantaged investment. This change will apply to investments made on or after 30th November 2015.
As announced by the Financial Secretary to the Treasury, David Gauke MP, at Public Bill Committee, the government intends to introduce increased flexibility for replacement capital. It is the government’s intention that this change will be introduced in due course through secondary legislation, subject to State aid approval. To this end, amendments 14 and 40 include powers to amend the EIS and VCT rules by regulations under the draft affirmative procedure